- With EV sales continuing to jump, here are the seven best EV and battery stocks to buy to exploit the sectors’ upcoming gains.
- Xpeng (XPEV): The Chinese automaker’s partnership with Volkswagen (VWAGY) is a game changer.
- Rivian (RIVN): The demand for the automaker’s EV is strong, and the company has largely stuck to its production schedule.
- Panasonic (PCRFY): The battery maker’s EV business is expanding rapidly.
For the owners of electric-vehicle and battery stocks, there has been some good news in recent months. First, the global unit sales of EVs continue to climb very rapidly, with global plugin vehicle registrations up 38% in June. CleanTechnica recently reported. Another piece of good news for EV stocks is that investors’ appetite for those names has returned in recent months. Plus, given the continued proliferation of EVs globally I expect for battery stocks to join the party. Here are the seven best EV and battery stocks to buy to exploit the sectors’ upcoming gains.
Investors have gained new appreciation for Xpeng (NYSE:XPEV) after the company signed a technical collaboration deal with Volkswagen (OTCMKTS:VWAGY). The companies will collaborate on developing two EVs for the Chinese market, and Volkswagen agreed to invest $700 million in XPEV. In my view, the deal validates my longtime belief that Xpeng is quite technically advanced, especially in the autonomous-driving space, and that it knows how to create EVs that appeal to Chinese consumers.
Also noteworthy is that Xpeng’s deliveries soared 28% in July month over month to over 11,000. That was the sixth consecutive month in which the automaker’s deliveries increased, showing that its new EVs are catching on in the Chinese market.
Unlike many EV start-ups, Rivian (NASDAQ:RIVN) has largely stuck to its initial production plans and has not encountered any demand issues. Specifically, the company recently reaffirmed its plan to produce 50,000 EVs this year, while it delivered an impressive 12, 640 of the nearly 14,000 vehicles it produced last quarter. Analysts, on average, had expected the automaker to deliver just 11,000 of its EVs during the period.
And the company’s EV sales look poised to continue to ramp up going forward. Indeed, Bloomberg recently reported that, among many owners of Tesla’s (NASDAQ:TSLA) Model 3 who were looking to purchase a competing EV in the ocming years, many ” were…taking a close look at Rivian…whose R1S SUV and R1T pickup were the top two models among alternative brands [to Tesla],” the publication said.
Also noteworthy is that Rivian owners will be able to utilize many of Tesla’s Superchargers next year. The change is likely to make Rivian’s EVs even more popular in the future in America.
On July 31, Panasonic (OTCMKTS:PCRFY) reported impressive second-quarter results, as its operating profit soared 42% versus the same period a year earlier to 90.37 billion Japanese yen. For its current fiscal year, the company forecasts that its operating profit will surge 49% to 430 billion yen.
Panasonic noted that, last quarter, it was having discussions to supply EV batteries to Mazda (OTCMKTS:MZDAY). Also in Q2, Panasonic disclosed that it would boost the production of the battery plant on which it partners with Tesla “by 10% within three years.” Going forward, Panasonic should continue to benefit significantly from Tesla’s sales gains. Finally, the Japanese company recently said that it intends to open four additional factories to meet the demand for its EV batteries.
Solid Power (SLDP)
Solid Power (NASDAQ:SLDP) is developing the technology and raw materials for solid-state EV batteries. These batteries are supposed to be safer, charge more quickly, and have meaningfully greater range than the lithium-ion batteries that are currently used by the vast majority of EVs.
And Seeking Alpha columnist Alessandro Calvo points out that SLDP keeps life relatively simple and inexpensive for both itself and the automakers that it hopes will become its major customers. The battery maker does that by enabling automakers to manufacture its solid-state batteries without changing most of their existing battery production equipment. Moreover, instead of making solid-state EV batteries itself, Solid Power sells only its solid electrolyte to automakers and licenses its technology to them.
As I’ve reported previously, BMW (OTC:BMWYY) has agreed to partner with Solid Power on battery development, with the venerable German automaker launching a “prototype line” to develop samples of the battery developer’s products.
That’s a partial validation of SLDP’s technology. And given the fact that BMW intends ” to produce two million all-electric cars by 2025,” an alliance with BMW is likely to prove quite lucrative for SLDP. As a result, for risk-tolerant, long-term investors, SLDP is one of the best EV and battery stocks to buy.
Li Auto (LI)
China’s Li Auto (NASDAQ:LI), which specializes in developing electric vehicles that also have small gasoline engines which extend their range, appears to be thriving in its home market. Last month, the company’s deliveries in China soared 227% versus July 2022 and rose 5% compared with the previous month to a huge 34,134.
Li’s “five-seat SUV,” which it started providing to customers five months ago, appears to be quite popular, as it had already delivered 50,000 of them as of the end of July. Meanwhile, “monthly deliveries” of its “six-seat SUVs” jumped from roughly 12,000 in March to about 20,000 last month. Analysts, on average, expect the automaker’s earnings per share to come in at 88 cents next year, up from a loss of 30 cents per share in 2022.
Volkswagen’s (OTCMKTS:VWAGY) EV sales jumped about 50% in the first half of 2023, accounting for 7.4% of the company’s deliveries. And the company has an impressive backlog of over 200,000 EVs in Europe alone. Overall, its operating profit came in at a strong 13.9 billion euros, with an elevated operating profit margin of 8.9%.
Moreover, the automaker has said that, in 2025, it believes that it will be able to generate the same profit margins on EVs as it does on gas powered vehicles. I believe that Volkswagen’s technological partnership with Xpeng will significantly strengthen the German automaker’s financial results in China and enable it to offer more advanced autonomous-driving solutions to consumers.
Chinese EV maker BYD (OTCMKTS:BYDDF), in which Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A) has a stake of nearly 10%, continues to grow extremely rapidly. Specifically, for the first half of 2023, it preannounced sales of roughly $1.6 billion, representing about a tripling over the same period a year earlier. And the company delivered about 700,000 EVs in Q2, “including (plug-in) hybrids,” Investor’s Business Daily noted. IBD estimates that the automaker’s Q2 profit will come in at a very impressive level of roughly $1 billion.
Also very positively, BYD’s Atto 3 electric SUV was “The top-selling EV in Sweden” in July, Elektrek reported recently. That gives me confidence that BYD can greatly increase its auto sales in Europe and, eventually, the U.S. IBD gives BYD an exceptionally strong EPS rating of 98 and a moderately good Accumulation/Distribution rating of B, indicating that large investors have been buying a meaningful amount of the shares in the last 13 weeks.
This post originally appeared at InvestorPlace.
On the date of publication, Larry Ramer was long XPEV and RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.